Local authorities urged to ensure outsourcing contracts meet new requirements

Anyone in local government involved in outsourcing should ensure that contracts likely to complete after September comply with new employment requirements warns law firm Nabarro.

From 1st October 2007 it will become a statutory requirement for local authority employees who are members of the Local Government Pension Scheme (LGPS) and whose employment transfers under a TUPE outsourcing contract to be offered broadly comparable pension rights by their new employer. Currently this is not a requirement, merely best practice under Department of Communities and Local Government guidance.

The change is part of the Best Value Authorities Staff Transfers (Pensions) Direction 2007. From October contracts between the local authority and the contractor must require the contractor to secure, for each transferring employee, pension protection which is enforceable by the transferring employee. The transferring employee will have the rights to acquire pension rights that are the same as, broadly comparable to, or better than, those he had under the public service scheme.

Kate Richards, Partner at Nabarro commented:

ìThis legislation will make what is at present best practice a statutory requirement. From October contracting authorities must protect future pensions of transferring staff via the same or a broadly comparable pension scheme. We would encourage all those involved in outsourcing contracts which are due to complete after September to make sure that their contracts comply with these new rules.î